Diana Richards saw a need in the vacuum cleaner industry and has spent her life chasing that need through her business, Vacuum Systems International Inc. VSI was founded in 1995 to manage national chain stores’ floor care equipment.
What started out as a single client wanting a resource for store associates to call and troubleshoot vacuum repair issues has grown into North America’s largest vacuum cleaner remanufacturing facility. Today, VSI assists nearly 72,000 facilities in 14 countries to manage their floor care equipment.
Backed by Richards’ hard work and endless dedication, VSI has turned into a one-of-a-kind company that earned the business of Jacobs Field (now Progressive Field), Sterling Jewelers Inc. and F.W. Woolworth Co. before the end of its first year in business. From there the company took off, but not without its share of challenges and obstacles.
“The biggest challenges have been our growth in the beginning and no money,” says Richards, founder, president and CEO. “It was getting the banks and the vendors to believe in this growth.”
Richards has never been one to take no for an answer and over the years she has convinced people to believe in her business’ concept.
Here’s how she has grown VSI despite the naysayers.
Believe in your business
When you’re growing as fast as VSI has you are often inventing the business as you go along. The challenge becomes finding people with an entrepreneurial spirit to believe in the business and help keep it going.
“You have to know that people won’t believe in you and that it’s going to be tough, but you have to put your blinders on and just go with it,” Richards says. “I pretty much gave up my entire life for this idea. You have to show people that are going to support you that you’re in this lock, stock and barrel.”
That’s the biggest challenge that entrepreneurs may have — a fear of failure.
“Don’t be afraid of failure and if you do fail, then get up and try again if that’s what you want to be,” she says.
Be willing to adapt
Richards has had to constantly adapt her business due to new clients or due to how the market has changed.
You have to realize when something is no longer working and change it for the better.
“Today, retail has evolved to really look at, not the cost reduction that our company gives them, but the green initiative,” Richards says. “When we started talking green initiative at a recent trade show, the biggest retailers in the world stepped into our booth and started talking to us.”
Nearly 1 billion pounds of cleaning equipment is thrown into the trash every year, and VSI has saved 500,000-plus vacuum cleaners from being thrown into landfills.
“We changed our conversation from a Vacuum Rotation Program to being a Core Recovery and Remanufacturing Program,” Richards says.
In the average vacuum cleaner, 85 percent of it can be saved and remanufactured. Only 15 percent of it has to be discarded when it goes through VSI’s process.
“When we talk to clients now, we are talking carbon footprint,” she says. “When I started the company, it was cost reduction. So now we’re talking environment and we’re getting the ear of companies that would have never thought about this kind of program.”
From that trade show on, Richards has realized that the Vacuum Rotation Program wasn’t working anymore and switched everything to the Core Recovery and Remanufacturing Program.
“You have to see when you’re not closing deals, what you’re doing isn’t resonating with people,” she says. “It’s just a matter of waking up and looking at everything you’re doing and every word you’re saying about your company and asking what about this isn’t working. So the Vacuum Rotation Program wasn’t working and the Core Recovery and Vacuum Remanufacturing Program has been a miracle that corresponds to companies green initiatives.” ●
How to reach: Vacuum Systems International Inc., (800) 997-8227 or www.vacuumhelpline.com
Alex Johnson wasn’t searching for a new job. In fact, he was quite content serving as president of the Community College of Allegheny County in Pittsburgh. Johnson helped the institution raise $41 million for scholarships and programs, as well as build a few new facilities.
“I was happy in Pittsburgh and doing well,” Johnson says. “We had really established ourselves as a leader in student success. Our graduation rate was up. Our numbers were up. We were getting money from foundations. These were things that evolved in the time I served as president over the past five years.”
But while Johnson was happy in Pittsburgh, here in Cleveland, Cuyahoga Community College was going through a transition. Its long-time president, Jerry Sue Thornton, announced in January that she would be retiring June 30. Since that day in January, the arduous search for a replacement that could carry on the legacy that she was leaving behind was underway.
When Johnson learned of the news, he was conflicted about pursuing the opportunity.
“I was called by headhunters to determine my interest in the Tri-C job, and I said, ‘No, that’s not something that I want to do,’” Johnson says. “I was not looking for something new. But at the end of the day I had to come to the conclusion that it was about, for the lack of a better term, my destiny. That was the only way I could rationalize considering the opportunity.”
From that point on everything started working in his favor toward going after the Tri-C presidency. For example, his daughter-in-law, who lives in the Cleveland area, got pregnant again and wanted family closer than Pittsburgh. The other contributing factor was that Johnson knew Tri-C very well, as he had been president of Tri-C’s Metropolitan Campus from 1993 to 2003.
“That struck a chord,” Johnson says. “I had learned so much as a president here at Cuyahoga, and I knew this community well. Once I realized that it was a possibility that I could become the president, I pursued it, and I pursued it diligently and aggressively.”
When June 30 came around and Thornton left her post, it was Johnson who had the task of filling her shoes as the college’s fourth president in 50 years.
Here’s how Johnson plans to move the institution forward with continued innovation and community engagement following its golden anniversary.
Return to Tri-C
Despite the fact that Johnson had a good thing going as president of the Community College of Allegheny County, there was something about Tri-C that drew him back after 10 years.
“I’m delighted to be back, because it does have a wonderful history in terms of innovation,” Johnson says. “It has a better history, however, with respect to community engagement and from my vantage point, that’s what I value about the institution. Innovation is an ongoing endeavor, but community outreach and engagement is among the things that Tri-C does best.”
Johnson, having only been in his new role as president for a month at the end of July, had a number of initiatives to focus on and the institution’s 50th anniversary in September was fast approaching. His first few weeks were busy ones.
“My calendar is very full, but it’s full with the right stuff,” he says.
Johnson has been traveling to the various campuses and taking tours. He has been meeting with the campus presidents and the college leadership to talk about his vision for the future. He has also met with individuals outside the institution, such as members of Tri-C’s foundation board and public officials like Mayor Frank Jackson and Cuyahoga County Executive Ed FitzGerald, to get feedback on what they see as the institution’s role in the future.
“I have to become reacquainted with the city,” Johnson says. “I know a lot of what is going on because it was this way when I was here 10 years ago, but there is a lot that has changed and I need to get up to speed on that. The way you do that is to talk to individuals about how the city has progressed over the last 10 years.”
On top of having to get reacquainted with Tri-C and Cuyahoga County, it’s important that Johnson and the institution continue to strive for support, particularly during a time when a Tri-C education means so much.
“It is pivotal that people understand the value of this institution,” he says. “My responsibility is to continue to get support.”
The third piece is to continue to promote a collective vision for the institution.
“This is not just Alex Johnson; this is our board of trustees, people from inside the institution who represent the ranks from top to bottom and across the breadth of the institution,” he says. “We all realize that in order to advance the institution, we’re going to have to graduate more people, we’re going to have to have more opportunities for them to join the workforce, we’re going to have to enrich the image of the institution through our marketing and communications efforts, and the last piece is to ensure that we are stable financially.
“That’s not just from me, it’s from a whole host of individuals I’ve had the chance to chat with, most notably the board of trustees.”
Vision for the future
Among those goals seen as areas Tri-C has to keep pursuing is a continued and more concerted emphasis on workforce development, and the fact that Tri-C needs to ensure that it has trained individuals to take current and future job opportunities.
As a result, Johnson is positioning Tri-C to expand its programs and create more short-term training opportunities. This is to ensure they result in certificates that have labor market value, and that the institution reaches out to the community so individuals know these opportunities exist and that they take advantage of them.
“The workforce and economic development has been primary among the things that we have talked about,” Johnson says. “The second thing that they continue to emphasize is that we need to graduate more individuals from our institution in a timely manner. We have been working on establishing our graduation goal for 2020 in concert with the national initiative around completion.”
Johnson is also focusing on marketing communications where Tri-C has to continue to foster and enrich the institution’s image.
“We’ve got to continue to do that,” he says. “We have to be forceful about telling our stories because so many great things happen for us. We’re a League for Innovation School — there are only 19 in the country. We are No. 4 in the country in terms of the production of nursing graduates among 1,200 community colleges.
“We have been recognized in our workforce development area for some of our manufacturing initiatives. We are a Goldman Sachs institution. Our responsibility is to ensure that we can promote the development of small business throughout our region. We are doing an outstanding job, and we got a $5 million grant for five years.”
With a strong focus on initiatives surrounding workforce development, student success, marketing communications and community outreach, Johnson also wants to make certain that Tri-C manages its costs and expenditures.
“We want the education that we provide our students to remain affordable,” Johnson says. “It’s already affordable, but we have to work hard to ensure it continues to be. As I looked at where we are financially, I think we do a very, very good job of managing our resources.”
Since Johnson is still fairly new, a lot of his initiatives are a work in progress.
“I’m meeting with my cabinet and I’ve asked those individuals who are responsible for each of these areas to come up with a tactical plan,” Johnson says. “So we have a tactical plan for student success, we’ll have one for finances, workforce development, marketing communications, and community outreach and engagement.”
These areas are not new to the institution — these are things Tri-C works on all the time.
“What I’d like to see is some idea of where we are headed in those specific areas with a focus on excellence in each one of them,” Johnson says. “These areas are not the weakest points; those are areas of emphasis. There’s strength in each of those; however, it’s about continuous quality improvement.
“You want to continue to ensure that it remains at the forefront of your institution. That’s what makes Cuyahoga stand out above other institutions and community colleges.”
Big shoes to fill
Another thing that separates Tri-C from a lot of other institutions is the fact that Tri-C has had long-term leadership.
“I’m the fourth president in the entire history of the institution, and we recognize that the transformation of an institution and the change that’s necessary comes more deliberately when you have long-term leadership,” Johnson says.
Thornton, Nolen Ellison and Charles Chapman, the founding president of the institution, all served long tenures as president of the institution.
“I’m No. 4,” he says. “My hope is that I can stay around long enough to benefit from the legacy that they’ve already established to advance the institution in the right direction. It’s a scary place because it’s daunting. I’m following in the footsteps behind three legendary presidents that people across the universe know, most notably Thornton, who was a national model for leadership excellence in community colleges.”
Johnson says following in Thornton’s footsteps is an honor, and he recognizes that he has to be a star within his effort to move the institution forward.
“The only thing I can do is benefit from her legacy to ensure what Chapman, Ellison and what Thornton envisioned for this institution continues,” he says. “And that is to serve as a model of excellence in community college education. That’s what we’re all about. It’s about innovation and excellence.
“Part of that is emphasizing those five things I talked about in order to move the institution forward in that regard. That’s what we have become and that’s the course we must continue.”
The institution, with the help of its presidents, has built itself into a nationally recognized community college, celebrating its 50th anniversary on Sept. 23.
“I think it’s one of the most important dates at the institution this year,” Johnson says. “The important thing about this date is it represents a transformative period at the institution. We’re going to build on the legacy to heighten our success.
“That’s a commitment to the future of this institution and the change of a president represents that. My inauguration is Nov. 21 and the anniversary is Sept. 23. They couldn’t have occurred at a better time for us.” ●
- Get acquainted with important stakeholders.
- Outline areas of emphasis.
- Build upon your core or legacy
How to reach: Cuyahoga Community College, (800) 954-8742 or www.tri-c.edu
Over the course of 50 years in business a lot can happen. In the case of Kurt Canova and Tech Electronics, many of those years have been successful, but that success hasn’t been achieved without a few issues in need of fixing.
Canova’s father started Tech Electronics, an independent provider and integrator of commercial communications systems, in 1963.
“The vision back then was a one-stop shop,” says Canova, who is the company’s president. “We used to call ourselves a total communication system. Today we see that concept evolved into a systems integrator, and Tech has become a technology services organization that concentrates in business communication systems.”
Tech Electronics’ primary product lines are fire alarm, security, voice, data, sound and audiovisual. The company serves the health care, education, commercial and industrial markets, and has seen growth in recent years.
“The last three years have been particularly exciting because we’ve been able to go from two office locations to six office locations and become a strong regional service organization,” Canova says.
Despite Tech Electronics’ longevity, celebrating 50 years in 2013, the company has had to overcome its share of challenges to get to the position it’s in today.
“We were growing as a company, but our systems weren’t keeping up,” Canova says. “Your internal systems have to be able to keep up with the growth and the timeline expectations of customers.”
The 250-employee, more than $45 million company wasn’t growing in an efficient manner. Canova had to make some necessary changes within Tech Electronics to ensure the company would survive for the next 50 years and beyond.
Here’s how he has helped Tech Electronics grow more efficiently.
Identify weak points
When you’re trying to grow but there are issues within your business, it is imperative that you do an assessment to understand what those issues are, why they’re happening and how you can fix them.
“One of the things my dad used to tell me was the phrase, ‘Growth without efficiency is counterproductive,’” Canova says. “Growth is a great thing, but it’s only if you can still provide quality, because that’s your reputation as a company. Once you start losing that, you’ve lost everything.”
Tech Electronics had started to see customer complaints in several areas of the business.
“That’s when we had to take a step back and do a self-assessment,” he says. “Nobody likes to hear about the bad things, especially because at that time one of the core things that led us to success was quality, and we were starting to see degradation. That’s one of the hardest pills to swallow when you see performance is lacking.”
As a leader you have to ask why performance is lacking and then keep slicing that down to get to the root cause. Sometimes that’s a process, and it doesn’t happen overnight.
“Once you get to that answer, are you willing to do something about it?” Canova says. “You have to have the pulse of what’s going on in the business, and you have to have a management team that can look at itself and say, ‘Hey, we have to fix this. Even if it means we’re going to stall our growth, this is more important.’”
Fixing the problem
Stalling the company’s growth is exactly what Canova and Tech Electronics had to do. For two years the company focused on updating its ERP (enterprise resource planning) system and implementing process improvement.
“The first thing we had to do was implement much stronger internal systems, which was an ERP system for us,” Canova says. “Now we were able to do the full integration of all of our different departments. That was a big challenge for all the employees, because they basically had to relearn their jobs.”
That whole integration process took about three years to settle down.
“Coming out of that three years we were ready,” he says. “We were poised as a company. Originally we were going from work order generation to invoicing, which could take us up to 60 days and shrunk it down to two weeks. Today, we can generate a service work order to invoicing in one day. Our systems no longer limit us. Now it’s just a matter of getting our employees to drive continuous improvement.”
The ERP system got Tech Electronics to think differently. One of the things Tech Electronics did was create new departments, including an organizational development department that concentrates purely on the internal employee.
“They’re constantly determining what we need to do,” he says. “What are our barriers, obstacles or new ideas? When you’re looking at growth, you have to first have a mechanism to fuel that growth. Adding organizational development and getting the employees engaged in that gave us an internal engine to fuel growth.”
Now the challenge became continuing the company’s growth.
“We had to go to other cities in order for us to grow as a company,” Canova says. “Over the course of the last three years we have made two acquisitions, but we had to get to that point first.”
Tech Electronics had to become financially stable, so it put together a financial plan, built-up cash reserves and then put together a specific plan for where the company wanted to go. The company eventually pulled the trigger on those acquisitions and in the last year and a half it has been working diligently on integrating them.
“You have to take a look at what you want to accomplish, develop plans to accomplish that and then you have to have the discipline to stay with it to execute,” he says.
Plan for future growth
To grow outside of your current market, as Tech Electronics wanted to do, you have to have a plan for how you want to do it.
“We do six days of strategic planning every year in which we bring the management team together,” Canova says. “We have a facilitator that we use to help tee-up topics to give us advice. We also reach out to advisers a lot. We rely on other people to help us out in order to make the best decision.
“Again, it’s all about self-assessment and that’s where the outside perspective can give you advice or tell you something you’re not aware of.”
When Tech Electronics went through its acquisition, the company had to determine how it was going to make it successful.
“You can’t be individuals in a company when you’re going through strategic planning or making business decisions,” Canova says. “Eventually everybody in the management team has to agree on the priorities and the things that will make the company the most successful.”
Tech Electronics has been successful at mapping out a good plan. The hardest thing for most employees to understand, however, is that acquisitions take time.
“It takes a while to find businesses that are even potential prospects and prospects that you want,” he says. “Then to complete the acquisition takes time and when it happens everyone has to be ready to go.
“We still had to go through a planning process as if we weren’t going to make an acquisition that year, but then be prepared if we did. That was hard, because you never know when an acquisition is going to occur. It took us three years from the time we started looking at doing the acquisition to the time we did our first one.”
Making an acquisition successful relies on a good planning process, ensuring that you bring appropriate team members into that process and creating buy-in and support.
“You can’t go around and get buy-in after things are happening,” he says. “We always had good open communications as to where we were at. At the beginning of our planning process not everyone is in agreement, but when we’re done, everybody is on board.”
A critical part of growing your business through acquisition is to understand how that acquisition will benefit your business and how your business will benefit the acquisition.
“We weren’t looking at a strategic acquisition to bring us into different services,” he says. “Ours was strictly about expanding into new cities for growth within existing product lines.
“We have a very specific sales and marketing strategy that we feel can be successful in any city. Our criteria as a service organization was to stay within the Midwest — it had to be 400 miles within St. Louis so we could provide necessary support.”
The other key to Tech Electronics’ acquisition plan was to expand within the company’s top-three manufacturers — Notifier, Lenel and Mitel.
“We wanted to ensure that the company we took over aligned to our strengths,” Canova says. “Once we have strengths to build off of then we can easily expand from there. It was all about making sure there were synergies in product lines and within a 400-mile radius of St. Louis.”
Whether it has been growing with efficiency or developing the next strategic plan for the company, a lot of that success has to do with the principles Canova’s father instilled into the company.
“The companies that endure are the ones with strong principles in how they conduct business,” Canova says. “Hitting that 50-year mark is a key benchmark in business that shows endurance and the ability to sustain those principles. It says we have great people that know how to take good care of our customers and our customers have shown their appreciation with repeat business.”
How to reach: Tech Electronics, (314) 645-6200 or www.techelectronics.com
Identify what problems are slowing your business down.
Fix the issues, even if you have to stall growth temporarily.
Focus on growth opportunities via strategic planning.
The Canova File
Born: St. Louis
Education: He went to the University of Dayton and received a bachelor’s degree in electrical engineering with a minor in business management.
What was your first job and what did you take away from that experience?
My first job, since my dad was the founder, was working here at Tech. I just worked around the facility sweeping, painting and doing maintenance. Then I worked in the warehouse. As I got older I started working out in the field with technicians on system instillations. I have done just about every position in the company, and I was glad to do that because as the president now it has given me a much greater perspective of what it takes to run the business from the ground up.
Who do you admire in business?
My mentor has always been my father. I learned principles and a way of doing business from my father. He taught me how to run a business.
What are you most proud of at Tech Electronics?
The thing that makes me most proud about our company is our people. They’re just phenomenal in their ability to adapt to the changes in technology. They have a commitment to our customers and truly want to take good care of our customers.
Who is one person you have always wanted to have a conversation with, whether they’re from the past or present?
Abraham Lincoln, because of all he had to deal with and how he overcame it. I’m always in awe of some of the things our country’s historical figures accomplished.
When D. Kevin Horner took the reins of Mastech as president and CEO in 2011, he had the confidence of the company’s leadership and board of directors, but the people in the business were saying, “Why him? He’s never been in the staffing business. What does he know?”
“Frankly, it was a very reasonable question,” Horner says.
Horner is an experienced IT professional, having been in the arena for the previous 30 years at Alcoa, where he served as CIO of business units in Europe and North America. Horner ended his time at Alcoa as the CIO of the entire company. Alcoa and Mastech, however, are two very different animals.
“There were some things I was very well prepared for because of my CIO experience, but there were also some gaps,” Horner says about entering his first CEO role.
In addition to his prior experience, Horner had one other ace in the hole — he had been on the board of Mastech since 2008, giving him a good grasp of the 1,000-employee, $103 million IT staffing firm’s daily business.
“Part of it was right place, right time,” Horner says. “Part of it was I was well-known by the board and part of it was I didn’t run a restaurant for the last 30 years. I had been inside of the IT services business for a very long time and I understood the IT staffing industry reasonably well.
“In fact, I understood it from the other side of the table and I knew a network of CIOs out there who are always looking for resources.”
IT industry employment in the United States is at an all-time high. The marketplace is rich in its desire for talent and there is not enough talent to go around. Before Horner could get Mastech immersed in all that opportunity, however, he had to fix a few problems the company was experiencing before its previous CEO left.
Here’s how Horner meshed his CIO background with his excitement to lead and grow a company as a first-time CEO.
Grip the situation
Coming from a $25 billion organization to a $100 million company offers plenty of differences. The same could be said when it came to the differences in Horner’s experience as a CIO and the duties he was now undertaking as a CEO.
While Horner’s experience had him prepared for a lot of what he would have to do on a daily basis, there were a few voids that he had to fill as he began to lead Mastech.
“At Alcoa we had customer and employee satisfaction measures, service performance measures. We benchmarked externally, managed our cost structure and we dealt with global culture,” he says. “That mechanism for running the organization really did prepare me to run a company.
“The second big thing that we did that really prepared me was a systemic companywide link between IT projects, innovation and business value delivered. That connection of results or outcomes back to accountability and commitment for achieving those results really helped now that I am where I am.”
Horner also drove a standardization program at Alcoa and across the world, which taught him that process matters when you try to create scale. While process matters, people matter more.
“Mastech is a people business and our product is talented people who get linked to our customer’s job needs in the marketplace.”
Some of the gaps that the CIO job didn’t prepare Horner for included those regarding strategy.
“Strategy for the business is a CEO role, which is now mine,” he says. “That’s a blessing and a curse. That doesn’t mean I didn’t do strategy, because I did, but it was either in response to business strategy or an influencer to business strategy.
“As the CEO, you are business strategy. That’s a key piece of what your job is.”
Uncover the issues
As Horner got settled into his new position, he didn’t have much time to sit back and enjoy the view from the corner office. He was quickly analyzing Mastech and moving forward.
“I met with my board with a preliminary set of thoughts and a preliminary action plan 10 days after I took the job,” Horner says. “Within 10 days I knew that I had a segmented business that, to put it mildly, as a board member I didn’t see the detailed segments and sub-segments of, I saw things on a rolled-up basis. On a rolled-up basis it looked like there was improvement happening and so on.”
Within the first five working days, Horner found out that Mastech had a segment of business whose cost far exceeded its revenue. That segment was a reasonably significant part of the company that clearly wasn’t working.
“As we peeled back the onion on each segment of the business, I didn’t sleep a whole lot in those first couple of weeks, but it was really easy to see that we had a couple of problems,” he says. “In that particular business, it was clear we needed to close several locations and change the executive leader who was running the business.
“We closed two locations, restructured the organization around two P&L heads, eliminated an executive leadership role, and challenged the remaining two P&L heads to grow what was left of the ‘old organization.’”
Mastech had another large-scale area where Horner realized that the cost structure to run the business far exceeded the scale of the business.
“It wasn’t that the people were bad,” he says. “The business was just not growing at a rate that would support the cost structure. So we adjusted that cost structure.”
Horner made these business analyses and decisions within his first two weeks at Mastech.
“By my 10th day at Mastech we had a short-term action plan to fix some basic issues,” Horner says. “We had board support for the actions, and we had an implementation plan for the actions. We executed one in the first month and the second one in the second month.”
To discover these kinds of problems within a business you haven’t run before, you have to have an idea of where to start digging. In Horner’s case, that meant understanding financials.
“On the first working day of every month at Alcoa, I knew the IT cost for the entire company around the world,” Horner says. “At Mastech, financial understanding and business analysis wasn’t a core competency for the line management, other than our CFO. Fortunately, it was something that came fairly naturally for me given my Alcoa experience. What seemed like a very natural place to look for me hadn’t really been examined.”
Find growth opportunities
Once Horner had discovered the issues holding Mastech back and made the necessary changes, he was able to switch his focus to what would make the company grow.
“It’s often easy to figure out which things you need to stop,” Horner says. “It’s much harder to figure out what you need to start.”
What became clear to Horner in the first 10 days was not only did Mastech have places in the company where the cost side of the business far outweighed the revenue side, which he quickly took care of, it also had pieces of the business that were growing significantly, but were cash starved because of unprofitable activity.
“When we stopped doing those unprofitable things we were able to divert the money into the side of our business that was growing,” he says.
“Our issue was fundamental — we had job requisitions for that talent that in the past we weren’t even working, let alone filling. Our initial conclusion was we had a capacity problem. We needed to add more capable people to our talent search and recruiting function.”
Within Horner’s first 13 months, the company more than doubled the size of its recruiting organization.
“We doubled the capacity for finding talent and linking it to new job opportunities and that’s how we grew. We also committed to investing in training and development for that new recruiting talent.”
Compared to its public peers Mastech has grown relatively quickly. There is only one public peer that has grown faster than Mastech in either 2012 or to date in 2013 and it’s a company that did a large-scale acquisition.
“We’re growing at one and a half or two times our public peers,” Horner says.
Now that Mastech is firing on all cylinders, Horner has to make sure the growth is sustainable, which starts with ensuring demand for IT talent continues with the company’s clients.
“You have to continually build relationships with your customers and you have to continually ensure that the demand side of that equation is there and will be there,” he says. “For us, it becomes consultant-centric really quickly. It becomes building relationships with the consultants and helping a consultant believe in the fact that Mastech is going to be a good option for their next job and their next five jobs after that so I can help them grow their career and grow their skill base.”
How to reach: Mastech, (412) 787-2100 or www.mastech.com
As a new CEO, understand what you know
and don’t know.
Analyze your business to uncover any problems.
Focus on business areas that are growing or have growth potential.
The Horner File
D. Kevin Horner
President and CEO
Born: Pittsburgh, Pa.
Education: Attended Saint Francis University in Loretto, Pa. Majored in math and computer science with a business minor.
What was one of the first jobs you had and what did you take away from that experience?
I worked at a paint store. I learned that the customer is always right.
What is the best business advice you’ve received?
If you take care of the customer, the customer will take care of you.
What do you miss about being a CIO and what do you enjoy about being a CEO?
I am loving the opportunity to run a business and I’m loving the type of business that we are in, because we put people to work every day. I do miss some of the scale in my previous role. Moving from a $25 billion entity that’s got name recognition everywhere in the world to a $100 million company has its differences that I miss.
If you could speak with anyone from the past or present, with whom would you speak with?
I would love to sit down with Winston Churchill and Franklin Roosevelt. To see the world through their eyes in the time that they lived in it would be really cool. Also, I’m a Pittsburgh kid, so I would love to sit down and talk to former Pirates right fielder, Roberto Clemente.
It’s hard to label something that happened 17 years ago as ancient history, but in the world of technology, specifically the Internet, something that happened 17 years ago is beyond ancient. It’s practically prehistoric.
Remember something called Ask Jeeves?
Before this other company called Google came around, Ask Jeeves was one of a few serious players in the arena of search engines where Yahoo!, AltaVista and Lycos competed.
Today, the company no longer answers to Jeeves. Instead, it has simply rebranded itself as Ask.com, and is working to differentiate itself in the world of search.
“Like other companies of our mintage or vintage, we were challenged by what was happening in search,” says Doug Leeds, who became CEO of Ask.com, a 220-employee company, in 2009. “With Lycos, Excite, AltaVista, and all the others that were at the beginning, Ask had a different approach at that time. We were about questions and answers more so than about searching per se.”
Headquartered in Oakland, Calif., Ask.com is a global service used by more than 100 million users. When Google came in and tore up the market with what turned out to be a much better product in algorithmic search, it was sort of an existential moment for Ask.com.
“What do we do about that?” Leeds says. “Other companies couldn’t compete and folded, but we never saw our traffic leave us. People still came to us. The question we asked at Ask was, ‘Why? Why is it that people continue to love our products and our services when other contemporaries were pushed aside by Google?’”
The answer was and still is the fact that Ask.com relies on a different user proposition.
“We say, ‘We can answer questions for you,’” Leeds says.
People felt very comfortable asking a question on Ask.com or Ask Jeeves, much more than they ever did on Google.
“What I said in 2009 was, ‘Let’s double-click on that experience,’” Leeds says. “Let’s figure out how we can explore providing more value to users when they ask questions … because that’s what’s keeping us in business.”
With many of the Internet companies born in the mid-’90s no longer around, Ask.com has not only survived, but is thriving in today’s world.
Here’s how Leeds is growing Ask.com to the next level.
Find a better way forward
Since Google first launched in 1998, Ask.com has been able to rack up some significant accomplishments. And Leeds, who originally joined Ask.com in 2006, was behind many of those great ideas as a member of the product management team.
“That wasn’t too long ago, but the world still hadn’t been as Googly then as it is now,” Leeds says. “We were doing some amazing things in our product at that time. Our former CEO and I got together and we said, ‘We can build a better search engine and a better interface to search than Google can.’”
Leeds and his team were confident that one of the reasons Lycos, Excite and others failed was because they weren’t listening to what the marketplace wanted. Even Google, they felt, could be better and improved upon.
“We poured investments into this,” he says. “I’m not just talking about back-end technology, but how you display search results and what features you give to people to consume them.”
In fact, much of what you see on Google today, things people take for granted as being Google or Bing products — like related searches or having a homepage that gets you engaged — actually started on Ask.com.
“Those were things that we invented and that we did first,” Leeds says. “Today, every search engine does that stuff, but back then it was cutting edge stuff that no one else was doing.”
Ask.com got a lot of great press at that time and was being called the Google killer. But what happened was Google copied those features Ask.com was offering its users.
“Anything that we were doing would show up pretty quickly on Google and people would say, ‘I like Google because of its related search,’ and we’re like, ‘Ahh, that started here! We did that!’” Leeds says. “People also say, ‘I like Google because you can preview a page by clicking on a button.’ That was us.
“But nobody ever said, ‘I like Google because it gave me a good answer to my question.’ Even though we’re building incredibly good products here and it’s keeping us around, and people love us and are impressed by us, the timeframe for which we can win any customer based on those innovations was relatively small because they could be copied.
“The timeframe for which we could win on innovating in Q&A was much longer because Google was not being used that way.”
Create next level innovation
Since Q&A was Ask.com’s bread and butter, Leeds went to work on innovations that would make that a more valuable experience for Ask.com users.
“We built a user community,” Leeds says. “Right now, we have 180 million users worldwide every month, but they weren’t answering questions for each other. It was just ask a question to Ask and hope that Ask gives you back an answer sourced from somewhere on the web. We said, ‘There must be a way to harness 180 million people to answer questions for each other.’ So we built a community and it’s been pretty successful.”
What was a transformative moment for Ask.com was realizing it shouldn’t be spending energy and resources on search technology, because Google and Microsoft were spending hundreds of millions of dollars a year toward search.
“We’re trying to keep up and we’re not as good at that and people only really want that when we fail,” he says. “Only when we can’t answer their question do they want the Web search results. Let’s focus on how to answer their question and let’s outsource our fail state to some other company who makes that their core business.”
That’s exactly what Ask.com did in 2009, and it transformed the company.
“It transformed our focus,” he says. “It transformed our marketing and the story we wanted to tell about why people should use us. It re-energized our company. Our business results have really taken off in the years since then because of the focus on what our users were coming to us for.
“That isn’t to say they weren’t happy with our old service, I think because Google changed the world we had to change our product and changing our product was getting back to what we were originally good at.”
If Ask.com wasn’t going to focus on search technology, but rather on Q&A, the company had to figure out what it was going to do to give users a good answer if it wasn’t going to be a series of links on a page.
“What we realized, and what our challenge is today, is that we have to create both the technology and the content with which that technology can draw on to provide great answers to people right away,” Leeds says.
“Whether that comes from another page, but you extract the right information from it, or whether you are aggregating information from a bunch of great content, or whether you actually present that content itself on the page, that is the challenge. Don’t just give them Web results. Give them great content that they can consume.”
The biggest challenge Ask.com has is building technology that can deliver that content in a scalable way, and it relies on some of the same things that search does.
“We’re rebuilding some of the things that we originally cut, but we’re building them four years later and things have changed,” he says. “It’s about understanding the actual semantics of what people are asking using statistical analysis to look at pages and finding out that different sentences in different engrams or different terms are showing up in the same relationship on this page as they do in other places on the web, and using that to extract information. That’s the technological approach.”
The other approach Ask.com is taking is actually acquiring great content and bringing it onto a page. In September 2012, Ask.com bought About.com.
“About.com represents a collection of authoritative articles on topics as wide-ranging as the Internet,” Leeds says. “When we looked at that site we said, ‘This is really high-quality content that answers many of those questions that people are asking on Ask.com. If we own the content experience, and we could work closely with the people who are creating that content, then we can answer more of our own user’s questions. That About.com model is one that we are going to replicate.’”
Besides About.com, Ask.com also owns Dictionary.com and Thesaurus.com. It also partners with sites such as Urbanspoon and Life123. The focus of the company in the future is to grow that portfolio.
“Whether that’s by buying companies that create the content themselves or by doing content partnering, all these things are the focus for the company — getting a great content experience on Ask.com, meaning an answer to your question both in brief and in full,” Leeds says.
“What About.com showed was doing that has benefits for both Ask users and About.com users and creates enough real synergies within the companies that the financial performance of both companies is significantly improved, especially About.com.”
Always be looking for what’s next
While the About.com acquisition will do wonders for both About.com users and Ask.com users, Leeds isn’t stopping there. The most exciting thing looking forward is the plan he has for the Ask.com product experience.
“We are going to significantly transform the way our product is brought to our users — what it looks like, how it works, the focus on Q&A and the experience on mobile devices,” Leeds says. “Across the board things are going to be changing in ways that users will really feel, which some will not like, but most hopefully will love, and really position ourselves as the place to go to get your questions answered on the web.”
One of the things Leeds says Ask.com has to improve is creating an environment where you go to an Ask.com page and if the logo were removed you would still know you’re on Ask.com.
“It should feel like a question and answer service without having to see the brand Ask.com,” he says. “There are a few sites that do that. At Ask.com, we’re still stuck a little bit in this evolution from search into Q&A, and what I’m most excited about is pushing forward into the Q&A experience so that you could cover up the logo on the page and you would say, ‘This is Ask.com because it’s all about Q&A.’”
The key to that innovation, Leeds says, is constant willingness to be uncomfortable.
“The thing about innovating is it’s really hard to do incrementally,” he says. “You can optimize or improve incrementally, but you can’t innovate incrementally, which means you have to do something completely different and feel uncomfortable.
“You have to do different exercises every day to make yourself feel OK with feeling uncomfortable to build muscle in innovation. That’s our big challenge every day. You have to transform uncomfortableness, a negative feeling, into silliness and acceptance, which is positive.”
How to reach: Ask.com, (510) 985-7400 or www.ask.com
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The Leeds File
Born: Los Angeles
Education: Received a bachelor’s degree from the University of California, Berkeley, and a doctorate from Georgetown University Law Center.
What was your first job and what did that experience teach you?
I worked at a stereo store called Affordable Portables. It only sold the Walkman. I started when I was 16 and worked there through high school and college. I learned about business, sales, listening to consumers and translating that into a product need.
Who do you admire in business?
Jeff Bezos. I’m such a fan of what Amazon.com does. They keep extending. It used to be just books, and then it became every product on the Web and off the Web. Then they bought Zappos.com and Audible.com, and introduced the Kindle. Bezos started the company and took it from nothing to where it is now, and all the challenges you have at each life stage of a company and having to manage through that is insanely impressive.
The other person is my grandfather. He was an inventor, and he invented the flexible straw, the bendy straw. He patented that and built the machines himself to start a company and for 17 years he ran the Flexible Straw Co. It was impressive to see that, and that it all started with tinkering.
What was the very first question asked on Ask.com was?
No one has ever asked me that, but that’s a really good question. I’ll have to find that out.
What is a question you have asked on Ask.com?
Every time I see a mock-up of a new product or feature we are going to roll out, people use the same question as the sample question — ‘How do I tie a bow tie?’
Some four years ago, Tom Daulton was given $250 million by GTCR Golder Rauner LLC, a private equity firm that specializes in the health care industry, and was told to purchase a medical device company that had the potential to be turned into a public company. Fortunately for Daulton there was such a company for sale, and it had everything he wanted.
That company was called Biopsys, which had been acquired by Johnson & Johnson’s Ethicon Endo-Surgery for about $310 million 12 years prior to Daulton’s search. Ethicon renamed the business Mammotome after the company’s breast biopsy system, which was the first vacuum-assisted, minimally invasive system for determining breast cancer.
Over the years additional image-guided products were introduced and the Mammotome brand became the market leader in breast biopsies. More than 4 million women worldwide have had an image-guided, minimally invasive breast biopsy using the Mammotome Biopsy System.
“Mammotome is like saying a generic term like Kleenex — that’s how well-known the name Mammotome is,” Daulton says.
Eventually, the biopsy procedure moved out of the hands of surgeons and into the hands of radiologists due to the extensive imaging used. Since Johnson & Johnson was focused on the operating room, it decided it was best for Mammotome to find a new home.
“That’s right about the time I was looking,” says Daulton, CEO of Devicor Medical Products Inc., the parent company for medical device businesses such as Mammotome. “GTCR and I had been talking for years and said, ‘Let’s go see if we could build, through a series of acquisitions, a $500 million revenue, $100 million earnings medical device business.’
“I said, ‘OK, let’s try it.’ They gave me $250 million and told me I could borrow additional money and wanted me to find an excellent business to acquire as a platform to build a much larger company so that GTCR could take it public.”
Daulton looked at 125 businesses before he found Mammotome.
“I narrowed it down using a thesis for what I thought was the best type of business that included being physician specific, the reimbursement pathway was clear and it needed a regulatory path that made sense,” he says.
With those three criteria serving as a crude filter for what company would be acquired, Daulton purchased Mammotome in July 2010 and headquartered it in Cincinnati.
“This was a great business to acquire,” Daulton says. “It’s in a very, very important clinical space of breast cancer, which has no cure. It’s worldwide, and the product is excellent for the patient, hospital and doctor.”
Now, three years later, Mammotome is growing at a blistering pace. There are offices in France, Germany, Italy, Shanghai, Tokyo and the U.S.
Here’s how Daulton redeployed Mammotome and gave the business new life.
Turn assets into a business
Daulton was searching for much more than just a company to acquire and grow. His search was for a business that could become much larger by acquiring additional businesses and going public.
“I was looking for a platform,” Daulton says. “When you look at the company does this thing have water coming over the fourth bulk head and there’s no way, or if you just turn on the pumps and build a better mouse trap will you have a good fighting shot. We felt Mammotome was an excellent business.
“It was in a wonderful market space, a global market space, in an important clinical area that wasn’t going to be fixed soon, and a little bit of innovation was going to go a long way.”
The type of acquisition Daulton did with Mammotome is one he calls an “uber carve out.” Everything, short of some employees had to be created.
“A carve out is a place to create tremendous value,” he says. “Anybody that can take assets and turn them into an operating business with revenue, gross profit, cash flow, and net earnings, that’s pretty hard to do.”
Daulton’s first step after acquiring Mammotome was to bring in a team of eight very experienced people. His goal was to hire by function, with each function serving as a spoke on the wheel.
“To run a company like Mammotome we literally brought in a CFO, a corporate strategy M&A person, a head of HR, a head of sales, a head of marketing, a head of regulatory and quality, and a head of manufacturing,” he says. “We literally set up each one of those functions, and each one of those functions built their infrastructure. Had we not done that, we would have gotten lost.”
Once a team was in place Daulton had to put a lot of focus on what would build value for the company.
“If you’re going to take the company public one day, what builds value?” Daulton says. “We were pretty ruthlessly focused on those two or three things, and in our world that was quality, cost and people.
“We hired 300 people in 24 months. There was a tremendous focus on finding people that could deal with a blank sheet of paper. A carve out is not a place for someone who hasn’t done the job you’re looking for.”
Now that he’d purchased Mammotome and found his executive team, Daulton’s hard work was just beginning — he had to build up and grow the business.
“We started with about 120 people and today we have about 560,” Daulton says. “We have grown substantially. That’s a blistering pace in those 24 months and we had to do everything.
“What I essentially bought was assets. I didn’t get a building, a computer system, all the employees, accounting, a factory, nothing. In 24 months I took the Johnson & Johnson folks and some other people that we brought into the company and literally built a $200 million company.”
Daulton built a state-of-the-art medical manufacturing factory. He and his team put in all the systems — marketing, finance, regulatory, etc. While all that was being done, there was a second thing that had to happen — the products within the company were starting to get old and updating was in order.
Update the business
The original Mammotome, while state-of-the-art when they launched it, was now old, outdated and losing competitive share.
“I think people get way too excited to make stuff that no one wants to buy,” Daulton says. “In our world it’s much easier. Is it faster, safer, less expensive, gets a better diagnosis? It has to do something better or you’re wasting R&D dollars. If you can’t answer those kinds of questions crisply, you’re wasting money. We spent a lot of time answering those questions.”
Two things happened that necessitated innovation for Mammotome. No. 1 was concern in hospitals around minimizing exposure to blood and blood-borne pathogens. No. 2 was doctors wanted the procedure to be faster because the patient is awake, has anxiety and the needles look pretty big.
“Even though everybody was trained on it, it worked incredibly well and it made the best quality sample, these other two things started seeping their way into the technology and Mammotome slowly started losing sales in the U.S.,” Daulton says.
“Our device, while still the worldwide market share leader, was a little like the Sony Walkman. When it first came out it was awesome, but other ways to do it started coming out.”
A development program was started in 2004 to see if a new product could be made that not only fixed its two issues, but also added a whole new clinically relevant feature. Mammotome had started that project, but Daulton inherited the business halfway through the project.
“It cost me $40 million to finish it,” he says. “There was a clinical need in this new ultrasound space, so we took some really bright engineers and marketers and talked to a lot of customers and made a product that fit that and reintroduced it.
“The new product not only addresses the speed and the closed system, but what’s most important now is how fast you get the patient in and out without compromising anything in the procedure.”
Daulton’s $40 million investment in R&D happened in the first two years of acquiring the business and it got the company a new version of Mammotome. The company also developed a whole new product called Elite, which is a tether-less, self-contained, battery-powered biopsy device.
“That was a massive undertaking between getting the old products to grow and then moving puzzle pieces around to build and grow the business,” he says.
Don’t rest on your laurels
Despite all the growth, innovation and success Daulton and Mammotome have seen in the first two years plus, there is no time to relax. Daulton is focused on introducing new technology and further growth opportunities.
“We’re very interested in acquisitions that make logical sense to the customers we call on,” Daulton says. “We’re not interested in acquiring things just to generate revenue or profits. We’re interested in things that our sales people know how to sell and that our exact same customers already buy and we can add some value.
“What value do we bring to them and what value do they bring to us? If you can’t answer those two questions crisply, you should not make the acquisition.”
The company also plans to expand further globally.
“Our Asia business in three years could be larger than our U.S. business just based off the sheer growth of the population and the trajectory of the business,” he says.
To accomplish all of that, it is very important that Daulton and Mammotome have the right team in place.
“You’re not going to be successful unless you’ve got a bunch of people that are really motivated, really smart, know what to do, and feel like they can make a few mistakes and they won’t get in trouble,” Daulton says. “Those people have to be led by people who have enough experience that we don’t drive this thing into a ditch. There will be guardrails so that we can take a few chances and a few risks, but still get down the road in the right direction.”
How to reach: Mammotome, a division of Devicor Medical Products Inc., (513) 864-9000 or www.mammotome.com
Find a business that adds value to you and that you can add value too.
Work to build and grow the acquired business.
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The Daulton File
Mammotome, a division of Devicor Medical Products Inc.
Born: Ames, Iowa
Education: He went to Arizona State University and received a degree in marketing.
What was your first job and what did you learn from it?
I worked at a camera store. I started when I was 14. I learned that working builds character.
What is the best business advice you’ve ever received?
Focus on the customer and really give them what they want. Also, call them proactively, even if it’s bad news. People want you to be truthful with them.
Who is someone you have looked up to in business?
My father, Merritt. He was a very successful, local, small-town merchant who had a great reputation and worked really hard.
What are you excited about at Devicor/Mammotome?
I think we’re going to have a very sizeable company. Things are going incredibly well with the new products and the employees are really excited and the customers are excited. If I cast forward three years, I think we have a good opportunity to build this to the $500 million mark.
Back in 2005, Hamdi Ulukaya stumbled upon a classified ad for a yogurt plant recently closed down by Kraft. After initially ignoring the ad, Ulukaya had a gut feeling that he should at least visit the plant.
It’s a good thing he listened to his gut. Otherwise the story of his company, Chobani Inc., may be very different today. After seeing the plant Kraft had for sale, Ulukaya bought it on the spot and went to work perfecting the recipe for Chobani Greek yogurt based on his belief that everyone, regardless of income or location, deserved access to delicious, high-quality yogurt.
“I grew up with yogurt,” says Ulukaya, who is founder and CEO of the New Berlin, N.Y.-based company. “Being from Turkey, a big part of our diet was yogurt.”
It wasn’t just a gut feeling that made Ulukaya visit the plant, but it was also a gut feeling that Chobani would make it in the world of yogurt in retail.
“I didn’t analyze it too much,” he says. “It was nothing but a gut feeling. Everyone I knew that had a knowledge of business were looking at the category and at who was closing a plant, which was Kraft. Everyone who looked at the idea was against it.
“I would be convinced for a day by the people I talked to and then the next day I’d change my mind. The only thing I knew was there was a big opportunity in yogurt.”
Here’s how Ulukaya built a yogurt empire that has gone head-to-head with category veterans Dannon and Yoplait.
Keep the faith
Chobani began with the hiring of five employees. However, the initial employees, including Ulukaya himself, lacked the experience in launching a yogurt company.
“I built the company based on people, not with experience from before, but willing to learn and try anything,” he says. “We had a bunch of people that had never done this before. None of us had run companies. None of us had worked in high levels of companies. None of us were from Fortune 500s.
“Whatever you look for in people to bring them into a company — none of us had it. Most of the people came in from an entry-level position and now they’re leading departments. Chobani not only became a business that grew, but Chobani was like a school to us, including myself.”
With that mentality Chobani’s first yogurt hit shelves 18 months after Ulukaya bought the Kraft plant, and has since grown to become America’s No. 1 yogurt.
“It was not easy, but what we found out was what is seen and what is reality are two different things,” Ulukaya says. “The category was owned by two major companies. Dannon and Yopliat owned about 70 percent of the market, and they had been there for years. As a startup, you go to the specialty stores first. That’s how you start and you grow and once you reach a certain level then you go to the big retailers.”
Ulukaya didn’t want to do that. He wanted to go to the big retailers first and be in the regular dairy isle.
“That was a crazy idea and nobody thought that would go, but at least we tried,” he says.
“When we tried, we convinced one retailer in New York, ShopRite. The result from that was we were able to expand to a couple of other retailers. After the second or third customer that we had success with for our yogurt I knew it wasn’t going to be about selling — it was about making enough. So from that moment on I lived in the plant.”
Chobani has grown from five employees to almost 2,000 today. The company started out with one truckload of milk a day and now uses more than 4 million pounds daily. Its products are now available nationwide as well as in Australia, the UK and Canada.
Build a culture that breeds passion
Chobani’s success has been driven by Ulukaya’s passion, which earned him the title of EY Entrepreneur Of The Year 2012 U.S., and subsequently, the 2013 World Entrepreneur Of The Year. That success has also been a result of Chobani’s culture of delivering the highest quality.
“We have a reason for doing what we are doing,” Ulukaya says. “We want to make an awesome product for everybody. We want to make it nutritious, delicious and accessible. While we are making it, we want to build things around it. We want to be a part of the community. We want to be places where we can make a difference. That gives people reasons to get together and do something awesome.”
As Chobani has expanded and its core team has grown-up, it’s been important to transfer that culture and belief to everyone else.
“That passion was so strong, and I think we are so connected to our business. I am personally so involved in the business, especially in the plants, that having those one-on-one conversations and being an example, not just preaching and putting things on the wall, but by living it and putting in hard work, affects us more,” he says. “We built Chobani on those qualities.”
Chobani has gone from nothing to $1 billion in five years. That kind of growth can be stressful, but Ulukaya enjoys what he does and that’s what pushes him forward.
“It has its highs and lows, because let’s face it, it’s not easy,” he says. “They asked Steve Jobs what was the most important thing in business and he said, ‘Passion.’ If you don’t have passion you would give up when things get difficult. We have so much passion and love for what we do that it becomes a part of our life. I personally don’t separate my personal life from my business, because I’m doing something that I love.”
Ulukaya calls that passion “The Chobani Way.” He doesn’t expect any of his employees to have to pretend they enjoy what they’re doing or act differently than who they are.
“I have never become different depending on whether I was involved in business or in my personal life,” he says. “You don’t have to pretend to smile. You come as you are and you just try to learn it. That became ‘The Chobani Way.’”
How to reach: Chobani Inc., (877) 847-6181 or www.chobani.com
Another year of EY’s Entrepreneur Of The Year Awards has come and gone, but the stories told and the lessons learned are far from over. Each year EY’s entrepreneurial programs get bigger and better and the entrepreneurs involved are getting more creative and leading more impressive companies than in prior years.
For instance, Hamdi Ulukaya, the founder and CEO of Chobani Inc., was named Entrepreneur Of The Year 2012 U.S. He went on to win 2013 World Entrepreneur Of The Year, making him only the second entrepreneur from the U.S. to win the world award.
This summer Smart Business caught up with a few of EY’s leaders, Herb Engert, Americas Strategic Growth Markets Leader, and Bryan Pearce, Americas Director of the Entrepreneur Of The Year Program, to discuss how these programs have evolved and talk about some new ones that are being developed.
It should be noted that EY itself is going through a leadership transition with the retirement of Jim Turley, global chairman and CEO. Smart Business spoke with him as well to understand the future direction of the company.
Here’s what we learned.
How are you effectively developing a seamless global leadership transition?
Turley: We announced Mark Weinberger was going to be my successor well over a year ago, probably 14 or 15 months ago. It was interesting because unlike many of our competitors who do this very quickly, we realize this is a really important transition.
The reason we gave ourselves 15 months of transition is because we’ve got 170,000-plus people around the world. So we take our time; we do this well.
How do you see your legacy?
Turley: If there is a legacy it’s our people culture. We’re a special place. More experienced folks join EY from our competitors than ever leave us to join the competitors. They come and they say it’s because of the culture we have.
What is one of the greatest marketing challenges moving forward?
Turley: Everybody has realized now, much later than we realized some 34 years ago, that the growth driver in the world is coming from entrepreneurs. They are the ones driving economic growth. They are the ones driving job growth.
I think we have to keep investing in and keep recognizing their strengths. But we don’t do this for our own marketing. We do this because of the impact entrepreneurs are having in the communities where they live, and they weren’t getting the attention in the press when we started the program some 27 years ago. Increasingly they are getting the visibility they need.
How did the issues discussed at the WEOY program relate to what’s going on in the U.S.?
Engert: They’re directly correlated. Everybody is talking around the issues and challenges in the world economy, which is growth, jobs, investment and innovation.
When I think about innovators and some of the companies that have come through the EY programs, they are companies that are disrupting, or said in another way, addressing a need, demand or service. In some cases in emerging markets they are replicating what might have already been met in another developed market.
That whole concept of replication and foreign direct investment, at the root of it, is what entrepreneurs are all about and it’s going to bring parody to the global world. A stage like WEOY puts it in perspective and how it’s all tied together.
Pearce: The companies that are here have been successful in growing their companies perhaps in their domestic or regional markets and this gives them a great opportunity to meet counterparts that are operating in other parts of the world. At a minimum, they may learn a little bit more about those markets. Ideally, they may meet people who are potential partners, strategic relationship candidates or people who could help them in some way to expand their own business into expanding foreign markets.
How do you plan to apply the information gained in the WEOY program into the Strategic Growth Forum this fall?
Pearce: The WEOY and the series of strategic growth forums that we do around the world are definitely part of getting knowledge to entrepreneurs as well as networks to entrepreneurs. When you bring those two things together, they learn more about how they can grow their business, run a better business, access capital and develop their people.
It’s a focus on the five important pillars around customers and growth: people, operating effectively, capital and managing risk. You get insights into that here and you’ll get insights into them at strategic growth forums.
How has the program content developed with WEOY?
Pearce: We have added a lot of content to what has historically been a program only focused on awards. That knowledge and greater focus on networking with each other obviously has been well received by the entrepreneurs. They came to WEOY to meet their colleagues, but also to learn and so we had people coming in as keynote speakers and panelists.
We have also created a series we are calling E exchanges, which are groups of 10 to 15 people sitting around the table with common issues. These E exchanges will be very helpful for people to get to know each other and to really get into some of the down and dirty, nitty-gritty of what they are doing to tackle problems in their own business.
Are there any particular countries where you see big opportunity?
Engert: I have been tracking where I see money going. Where is the most foreign direct investment happening? Africa is clearly one. In South America, Colombia has been coming much more into its own, as have Indonesia and parts of Southeast Asia. Those are some of the markets you’ll start to see. Mexico is another one you have to watch because it’s close to the U.S. and its leaders have had change in their political landscape to be more pro-business. It’s the No. 7 GDP nation in the world.
What does the Entrepreneurial Winning Women Program mean to EY and how is it developing?
Engert: The Winning Women Program is a recognition program, but it is so much more. It really is a development program. We really focus on recognizing the women and giving them an award, but we’re putting them into an EY incubator where we give them the opportunity to participate in a lot of different aspects of thinking about the strategy of their business, their financial plans, how they approach media, branding, PR and investors.
We’ve learned a lot in the last five years of this program, and I’m proud to say we are expanding that around the globe.
Pearce: One of the recognitions that we had was that women are 48 percent of business owners in the world. They’re starting up businesses at a rate more rapid than men right now. But part of the challenge is scaling. You don’t tend to see the women-led businesses scaling as rapidly as others do.
What I think has really been the strength of the program is that there is more than just an award. There is ongoing education. They are recognized through the awards program, but also get mentoring and other skills to help them build better businesses. And then we bring them to events like WEOY.
We will have virtually all of them at the Palm Springs event in November. So they have that opportunity to get integrated in with our EOY award winners and other great entrepreneurs and find partnerships and boards of advisors and directors and various other things that can help them to scale their business.
So we began that in the U.S. We are now rolling that out to Canada and Brazil this year and looking at more rapid rollout into other countries because it is certainly a great opportunity to help support these women as they grow these businesses around the world.
What about the addition of a family business component?
Engert: The Family Business Award was put in place because family businesses are the bedrock of communities. They’re the unsung heroes.
Most private companies are family-owned businesses and a lot of public companies are actually family-owned businesses as well. A significant amount of them are multi-generation family businesses and it creates a focus on that market segment.
It’s a totally different class of business with different needs and attentions. So we are trying to celebrate family business, which will provide a lot of great learning and perspective for us.
Pearce: Our definition is that families are those at least in the second generation or beyond. Not only do you have all the same challenges that another company, private or public, would have in growing the business, but now you have this added dimension wrapped around it of family dynamics.
We try to bring them together with each other so they can learn from other families how they are handling those same kinds of challenges around family integration, succession, fundraising, liquidity, and all of those kinds of things, and then we are able to provide services to them as we look at managing through those same issues.
Across the 25 programs regionally in the U.S. we had more than 200 nominees this year that want to be considered for the family business award, which was a great start.
Can you explain a little bit about Endeavor?
Engert: We have a partnership with Endeavor. They are focused on building a better working world themselves and investing in and promoting entrepreneurs in emerging markets around the globe. The Endeavor model is wonderful because it’s entrepreneurs who are opening a local chapter, but have strong ties to the global connections of Endeavor that help bring entrepreneurs and perspectives to bear.
Endeavor is a great program and we’re proud to be partners with them. I look forward to Endeavor expanding further around the globe because they are a key difference in some of those emerging markets.
Pearce: In many of the countries that they operate in, particularly in the Americas and in Latin America, we’ve got strong relationships with our EOY program.
For example, this year is the first year that we’ve had EOY in Uruguay, and that really began as a partnership between Endeavor Uruguay and one of our former partners who is on the board. We were able to team together and the initial EOY gala was combined with the Endeavor gala. We had more than 800 people attend in year one. So it shows you the power of entrepreneurship and certainly the power of the partnership between Endeavor and EY.
Nesco Resource, one of the nation’s leading providers of human resource solutions and the largest national staffing firm based in the Cleveland market, has expanded its senior management team to accommodate significant company growth.
Andrew Deutsch has been promoted to executive vice president, Central USA Division and Risk Management. An alumnus of Cleveland State University, Deutsch has more than two decades of experience in the staffing industry, the last seven with increasing responsibilities at Nesco Resource.
Great Lakes NeuroTechnologies recently announced that the company has received an allowance of claims from the U.S. Patent Office for an application covering their system and method of stimulating the brain during sleep to treat movement disorder symptoms.
The claims cover a system and method including a wearable apparatus to position an array of electrodes on the surface of the scalp, provide low dose stimulation to the brain using transcranial direct current stimulation (tDCS), and delivering this stimulation during different stages of sleep.
Buckley King announced the addition of Elizabeth A. Crosby to its Labor & Employment Practice in Cleveland. Crosby is the first female attorney in Ohio to be certified with dual specializations in Labor & Employment Law and in Workers’ Compensation Law by the Ohio State Bar Association’s Specialty Board.
OMNOVA Solutions Inc. announced its 2012 Technology Award recipients. This annual award program recognizes exemplary technological contributions by associates in OMNOVA’s research and development, sales and marketing, technical service, operations, product management and communications organizations. Mark Bishop, Bill Brown, Nick Triantafillopoulos and John Westerman, all from Ohio, were part of an innovation team that successfully developed a powder-based polymer for use in high-performance water-based oil drilling fluids.
Ed Miller, Frank Schumann, Joy Untch and James Vaughn, all from Ohio, were part of a team that developed Sunbond® 3410 latex as a direct response to a need in the market for an FDA and BFR compliant, non-styrene butadiene paperboard coating for indirect food contact. Sunbond® 3410 offers enhanced runability during application, superior strength, an APE-free composition and low VOCs. This product can be utilized for applications that include cereal boxes, microwaveable frozen food packaging and ice cream cartons.
Medical Mutual recently announced that Mary Anne Bromelmeier has been appointed System Development and Maintenance manager, and John Uhlir has been appointed vice president of IT Infrastructure and Operations.
In her new position, Bromelmeier will be responsible for the delivery and execution of applications that support the Care Management department. Bromelmeier will also collaborate with Care Management to support transitioning business needs by creating new solutions for medical drug management, case management and utilization management.
Bromelmeier is a proven information technology leader with more than 20 years of prior experience at EY.
In his new position, Uhlir will oversee the management of staff and systems related to the company’s help desk and computer systems operations. Uhlir will be responsible for infrastructure ranging from desktop devices to back-end servers, as well as computer networks and phone systems.
Previously director of Infrastructure and Connectivity, a position he held since joining the company in 2007, Uhlir has 28 years of professional experience in the information technology field, all in the medical insurance business sector.
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Innovation can be elusive. And there’s a reason for that. It’s not easy. Innovation is something that many companies seek. When innovation is accomplished, success typically follows. But what truly makes a company innovative? Is it the number of patents held, the ability to make a revolutionary change to a service or product, or is it creating something that is the first of its kind?
An even harder question than what makes a company innovative is, how is innovation itself created? To help answer this question Smart Business took a look inside Rockwell Automation, a more than $6 billion company solely focused on automation.
Rockwell is divided into two main segments — the Control Products and Solutions Group, and Architecture and Software Group. Scot Tutkovics works in the Architecture and Software Group as the vice president of engineering for Control and Visualization, which is the largest business unit in the company. He his responsible for roughly 1,000 engineers spread out in Milwaukee; Cleveland; Phoenix; Mission Viejo, Calif.; Montreal; Singapore; Dalian, China; and Katowice, Poland.
“We are responsible for the heart of our integrated architecture,” Tutkovics says. “We go to market with products, but also through services. We sell configurable, programmable systems to solve any number of business problems that people have, largely in the manufacturing space, but also in entertainment such as amusement parks, and some automation on ships for pumps. Manufacturing is our bread and butter, though.”
Rockwell has received acclaim for its ability to innovate year after year. Both Forbes and Thompson Rueters named the company a top innovator, and within the past two years the company has led Northeast Ohio in patents produced, and was second in the state behind only Procter & Gamble.
Here’s how Tutkovics and Rockwell Automation keep the innovative juices flowing.
Create a culture of innovation
While Rockwell was named the regions top patent producer a year or two ago, the company has not slowed down today. It continues to drive innovation through patents, but that’s just one of the measures of innovation, not the only measure.
“The culture of innovation goes all the way to the top,” Tutkovics says. “Our CEO is somebody that believes in this greatly and talks to all of our engineers regularly about it.”
The company has a yearly celebration of innovation where it recognizes engineers that not only were awarded patents throughout the year, but also the ones who submitted ideas even if their idea came up short of a patent.
“One of the reasons innovation has been so successful is we recognize the engineers for doing this kind of work and coming up with the great ideas and following through by putting them into products,” he says. “Recognition is a big part of it and we make sure that’s a priority of our company.”
Innovation is the lifeblood of Rockwell. The fact that the company continues to drive innovation into its products and stays state-of-the-art allows it to make the world’s most successful customers, and that customer success results in customer loyalty.
“If they keep coming back to us it grows our business and allows us to pump more and more development dollars back into innovative design,” he says.
R&D spending within Rockwell is north of $200 million a year and a lot of that goes into developing innovative products.
“Within our product development process we have stage gates that we go through to make sure that we’re not violating some other company’s patent, but also to capture ideas that are unique that we should be protecting,” Tutkovics says.
“Secondly, an engineer may have an idea that may be applicable to something else in the company. We have the ability for them to submit those ideas.
“Then we have a regular review committee that’s made up of the most senior engineers in the company and they make sure the idea is vectored into the right area of the company.”
The third area of focus Rockwell uses to generate new ideas is innovation workshops. These workshops are for hot topic areas, and there are usually several based on requests from the company’s customers.
“These workshops bring together the best minds in the company and they talk through new ideas and things that can add value for our customers,” he says. “Many times they output ideas that may get patented.”
Creating a culture of innovation isn’t easy, but if you put the right ingredients together and continuously work to improve products or services, you can achieve it.
“The first thing you need to create is a culture in which those types of innovative ideas from the population have an avenue to be voiced,” he says. “Secondly, the real game changers are the innovations where people come up with a new idea and way of doing something. You have to create a culture where that is valued and people understand that’s something the company wants them to do.
“Creating the recognition, creating an understanding of the value, and then providing the avenue for people to communicate those ideas are the keys.”
Company vs. customer
Innovations can come from numerous areas that generate ideas, but two of the biggest are in-house innovations and those that come from customers. There has to be a balance between the two.
“A lot of the features that we put in products are a lot of what our customers are asking for,” Tutkovics says. “But at the same time, customers only know their specific area, and one of the great values a company like Rockwell provides is we not only serve automotive, we serve many industry segments.
“Since we have the ability to look across so many different industry segments, we start to see them in ways that maybe someone in a single segment wouldn’t see, and that allows us to suggest ways of solving problems differently.”
Rockwell serves markets that by their very nature are much more conservative and risk-averse than a consumer market would be. Not everybody wants the latest and greatest innovations.
“We have to make sure that we’re turning that innovation not just for innovation purposes,” he says. “In a consumer market, people will buy something just because it’s new and it’s cool. In our markets, new and cool might get you in the door and start the conversation, but new and cool better turn into something tangible for the customer.”
Recognize your innovators
What helps drive innovation at Rockwell and motivate the engineers is the amount of recognition the company gives to those employees. Rockwell has an annual dinner that it does in multiple locations around the world to recognize engineers for various levels of innovations.
“Without the company really stepping up and showing that level of commitment to innovation, it really becomes lip service,” Tutkovics says. “It’s great to say the words, but people are smart enough to understand you have to put your money where your mouth is. You have to live what you’re saying, and I’m proud to say that’s something Rockwell does.”
Having state-of-the-art products and being known for having the highest quality products in the industry not only makes it a great place to work, but people are proud of the fact that they have something to contribute to at Rockwell.
“All of that results in increased employee engagement, and as engagement goes up productivity goes up,” he says. “That’s a real driving force for people to know that the work they are doing means something and is recognized. Without that recognition it just becomes a place to go to work every day and that’s not a place you want to stay long-term.”
How to reach: Rockwell Automation, (440) 646-7900 or www.rockwellautomation.com